Whether incorporated or a home based sole proprietor, business owners can deduct many operating expenses from their income. Here is a list of the most common expenses and a tip for effectively keeping track of them.
- Advertising – Costs associated with marketing your services may include: Pay per click online campaigns, print and radio ads, direct mail, memberships in business associations and networking groups.
- Car and fuel – the proportion of automobile expenses related to business use can be deducted. Make sure to keep an auto expense usage log in the event that you are audited.
- Insurance – Business liability, property, trade credit and any other business insurance.
- Legal fees – Business legal advice fees typically result from incorporations, lease reviews, shareholder agreements, contract development and unfortunately at times, litigation.
- Eligible maintenance and repairs – Upkeep of buildings and equipment including utilities.
- Equipment and supplies – Common expenses include office supplies, telephone and cell phone services, computers and related technology and furniture.
- Support staff – All staff expenses including contractors are a deductible expense. Make sure to treat employees as such rather than contractors if for all intents and purposes the individual(s) is working exclusively for you on a full time basis.
- Taxes – Yes, some taxes are deductible and they include property taxes and HST.
One of the most common financial mistakes that business owners make is commingling personal and business expenses.
By taking advantage of all tax deductions available and tracking them properly will allow business owners to minimize tax and simplify tax reporting.
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